Wednesday, November 26, 2008

Pain time for Karnataka

Pain time for Karnataka
Meltdown Hits Car Sales, Property Registrations, Revenue
Vinay Madhav, Anshul Dhamija, Anil Kumar M & Kudli Gururaj |TNN

Bangalore: Global financial meltdown is hitting home and how. With people buying half the number of cars they earlier did, with property registrations falling by 30%, with manufacturing firms cutting output, Karnataka’s tax revenues are taking on a shade of red.
So much so that chief minister B S Yeddyurappa
is planning to cut non-plan
expenditure, that is, reduce spends on maintenance of government buildings, offices, vehicles, phones etc. Piquantly, the state is failing to collect municipal taxes. City, town municipalities and panchayats collect taxes for use of land, water, maps, commercial licences. Better rigour in tax collection would substantially up the state’s coffers as currently less than 40% i.e. Rs 370 crore out of Rs 940 crore has been collected.
The pain is most visible in the automotive sector. Data shows that car sales in Bangalore have stalled. August onwards sales of cars plummeted by almost 50%. Between January and July monthly car sales averaged 6,000/7,000 units per month compared with 3,500 units post-August. In contrast in 2007 (calendar year) the city clocked sales of 69,405 cars, an average of around 5,800 sales monthly.
Realty is no different. The long lines at the sub-registrar offices across the city have melted with the heat of the downturn. Registration of land and building have fallen by about 30% over the previous year till now with stamp duty revenues dipping.
Stamp duty (8.4% plus registration fee of 1%)) is another huge source of revenue for the state government. The last two years Karnataka has not been able to meet its revenue target in this sector.
The number of registrations between April-October clearly shows this dip. Last year for the above period 8.86 lakh documents were registered across the state whereas this year the figure is 6.06 lakh. Stamp duty revenue is down from Rs 2,053.32 crore to Rs 2,018 crore. The target was Rs 2,410.51 crore.
Inspector General for registrations and Commissioner for stamps K R Niranjan admitted that the registration of land and houses had fallen all over the state thereby affecting government revenue. “Most of the buying activities have either stopped or people are postponing property transactions, waiting for the price correction. We hope the situation may improve in the coming days, “ he said. Bangalore city which contributes an overwhelming portion of this revenue mirrors a similar slump. Revenue from stamps and registrations fell from Rs 1,358.88 crore (1.05 lakh documents) to Rs.1,285.71 crore (to 96,837 documents). Bangalore’s target was Rs 1,680.99 crore, which means only 76.49% of the target has been met so far. Commercial tax, a major revenue earner for the government, is in trouble. The Commercial Taxes department, which has always exceeded its target, is struggling to reach its current year target of Rs 19,343 crore. Motor vehicle tax divisionally is missing target by Rs 2 crore-Rs 3 crore a month. Usually, the department used to achieve 105 % of the target on monthly basis. “We have reached 90% of the target given to us on monthly basis. There is still time and we are hopeful of achieving the target,” said joint commissioner of transport Muniveere Gowda. Transport department has a target of Rs 2,098 crore revenue generation from motor vehicle taxes.
Meltdown hits most sectors
Property registrations down 30%
Sales of cars plummet by almost 50%
Motor vehicle tax divisionally is missing target by Rs 2 crore-Rs 3 crore a month
Manufacturing firms cutting output


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